ALBANY -- A 6 percent cut is being required for all organizations that assist people with developmental disabilities. While the cut is meant to replace "lost federal revenue" in the Medicaid program, officials at resource associations in the state like the ARC of Rensselaer County and Wildwood feel that their clients -- and even the general state economy -- will suffer negatively from the cut.

In his 30-day amendment to the state budget, Gov. Andrew Cuomo authorized actions to address the loss of federal revenue as a result of modifications to the current Medicaid financing system for developmental disability services, according to a state press release. "These actions generate $500 million of savings, including $180 million from accelerating Medicaid Redesign Team initiatives and delaying investments, leveraging $200 million in current-year under spending to generate 2013-14 savings, and $120 million from a 6 percent reduction to OPWDD Medicaid rates for not-for-profit providers," it states.

These savings, however, come at a cost, said Jim Blessing, associate executive director of the ARC of Rensselaer County. He worries that the across-the-board cut will push the ARC back toward "institutional care," he continued. "We have come so far with individualized care."

The ARC, with its 250 full-time employees, serve 750 people and their families.

Blessing added that the budget is already "very lean" since most of the money goes toward services and they have been trimming their budget consistently since the fall of 2008. "The people that will lose out in all of this are the people with disabilities," he said.

About 73 percent of the ARC budget is for direct care, 10 percent for property equipment, a little under 11 percent for utilities, and 6.5 percent for administrative costs. The local ARC receives about 90 percent of its budget from Medicaid, or about $24 million of a $27 million annual budget, said CFO Don Mullin.

This replacement of lost federal revenue, as its described in an outline of the 30-day amendments, is needed because a total of $15 billion was overpaid to such associations over the past 15 year at least, estimated Mullin.

"It was all approved and all on the radar. But now they want that money back," said Blessing.

A spokesperson for the governor said "The federal government has held that for more than 20 years New York has been reimbursed in excess of what it costs to provide OPWDD services. To resolve this longstanding issue for once and for all, the state is reconciling the rate to the level that the federal government believes is appropriate. While we're sensitive to the possible effects of less federal funding for these services, they are necessary so we can move forward and put this dispute in the past."

For Tom Schreck, director of communications for Wildwood, he forecasted that there would be "long term ramifications" for the cut that would affect the general public and the regional economy, not just those with disabilities.

"If we have to lay people off, that will also affect their families. That will affect those we serve and their families. That will be more people out of the work force and unemployed," Schreck said.

Wildwood serves about 1,500 people and their families with 650 employees around the Capital District. "We are doing everything we can to make sure layoffs do not occur," he added.

Both organizations are talking with their legislators and lobbying to attempt to reinstate the 6 percent funding which would reduce the ARC's budget by $1.5 million and Wildwood's $31 million budget by $800,000, officials said.

Since it was not included in the initial executive budget from January, the groups -- along with many others -- have been given about five weeks to find a solution. For the ARC, that could mean 41 staff layoffs.

"We're in the cross-hairs of the state and federal governments," Blessing said. "And I'm concerned people's quality of life and safety will be compromised."